Published On : Sun, Oct 8th, 2017

Will GST dampen the Diwali shopping? We suggest not to expect a ‘cracker’ of sales and offers

Nagpur: As the festive season is approaching, like every year we all are ready with a long shopping list to ‘bag’ the benefit of discounts offered during this period. We, the consumers, are often spoilt for alternative across product categories as retail shops, branded stores and malls try to boost up sales through hefty discounts and freebies. However, launch of the new indirect tax regime, the Goods and Services Tax (GST), has been prompting consumer goods companies to tweak their discount strategy. As a result of which gift vouchers, freebies and promotional offers may not be directly offered to woo consumers this year.

Your shopping experience might be a little different this year. The festive bonanzas may not appear to be as lucrative as past years. With the introduction of GST, manufacturers and retailers continue grappling to work out the best deals to ensure their customer base and profit-margins match the previous years. But before you curse the GST for killing your festive shopping goals, be ready to witness a more realistic discount on your purchases this festive season.

The affect of GST has been visible in the market from consumer’s as well as the trader’s end. Although, the center has announced major cuts on several taxes on Thursday, the market has slowed down and is expected not to gain much boost in the festive season. After the introduction of GST, there has been a sharp decline in volume of sales of various commodities due to rising input cost.

GST has flipped the whole market and not on the brighter side. The experts have stated that the market has slowed down to a large extent in this festive spell. “As the market slowed down, there have been several job cuts. This, in turn, has decreased the buying power of the consumers affecting the market growth. After demonetization, implementation of GST has only added to the market dawdling”, stated Dipen Agrawal, President, Maharashtra Traders Association. He has also informed that as the market is slow, we may observe off-season discounts for luring of customers.

We bring you an ultimate guide to refer to understand the market trend before you plan your shopping spree ahead Diwali.

What is Diwali without sweets and Chocolates? Incomplete!

When we hear the word Diwali, chocolates and sweets immediately start floating in our imagination. Nevertheless, with an added GST on sugar, the sweets might not taste that ‘sweet’ with the hiked prices.

What is Diwali without new clothes? Boring!

With various tiers of taxes imposed on apparels based on their cost price, we may not see lofty discounts and offers this year. We may not see ‘buy one get one free’ offers or freebies as it won’t allow retailers to claim input tax credit facility on zero value products.

What is Diwali without new gadgets and appliances? Any other festival but NOT Diwali!

If you are planning to buy a high-end phone or a home appliance, it may not come with a hefty discount this festive season. However, after the implementation of GST, electronic items saw an increase in tax in comparison to previous tax system. This may see softening with the benefit of input tax credit reaching to the downstream.

It is also suggested that if the consumers are planning to invest in property, they should purchase constructed house as they have been kept outside the GST umbrella. Similarly, to purchase gold, it is advised to invest in Sovereign Gold Bonds which, too, has been kept excluded from GST tax. “Till Friday night the sales of gold and jewellery was observed to be only 50 percent as compared to that of last year. However, the weekend is approaching and the GST has been relieved a bit so we are expecting acceleration in the sale. Also, the actual impact can only be analyzed on Monday that whether the sale was at a gloom because of GST or not”, said Rajesh Rokdey, Chairman, Gold/Silver Traders Committee.

So before you plan to buy or invest, be thorough with its tax structure.

—Aditi Mishra